What Are the Pros & Cons of an HMO?

Health maintenance organizations operate under strict guidelines designed to control spiraling health care costs. They offer plans that spell out what doctors may and may not do, procedures for pursuing various types of treatment and oversight to ensure compliance. Expenses are generally lower as a result, with accompanying limitations that participants must accept

Less-Expensive Premiums

• HMO premiums are typically less expensive than traditional plans from private insurers, which represents one of their primary benefits. Employers pay a fixed fee for each enrolled participant, with employees often covering this cost through payroll deductions. Employers may also choose to absorb this cost and offer health coverage as an employee benefit.

Co-Pays

• Under an HMO, patients are responsible for a co-payment rather than a deductible. The cost is typically minimal, generally averaging $15 for each office visit. When further treatments are necessary, co-pays for hospital stays and outpatient care are significantly lower than with other plans. The paperwork requirement for patients is minimal, and usually all they need do is show their card. The cost for prescriptions is also quite low, which makes these plans particularly attractive to the elderly and those who need regular medication.

Health Programs

• Beyond the actual doctor and hospital visits, HMOs recognize the mutually beneficial aspect of contributing to, or outright paying for, programs designed to maintain good health, including gym memberships and regular checkups. This makes good business and moral sense, as it can save them hefty costs down the line, while keeping patients healthier and catching potential problems sooner.

Limited Choice

• HMOs maintain lists of participating doctors and specialists to whom patients must go. While these can be quite large, they are not comprehensive, so people can be forced to give up their longstanding physicians. Patients can still choose to go to those doctors, but they are responsible for the cost of the office visit and any related follow-ups. Under HMOs, doctors must first refer patients for any specialist or emergency-room treatment, as patients cannot choose to go on their own. These plans also provide financial incentives to doctors to limit such care, and they must often seek permission before suggesting further treatment.

Lack of Privacy

• HMO employees may review patient records at will to ensure efficiency and doctor compliance. Medical histories are no longer the sole domain of doctor-patient privilege, so participants with sensitive or recurring medical conditions may be concerned.